Windows 8 And Einstein's Definition Of Insanity

Microsoft is stuck beating the same drum to a public that has made up its mind about Windows 8 and Surface devices. Is it too late to make changes?

It's been a rough two weeks for Microsoft and Windows 8.

The company revealed that its Windows 8-based Surface products generated only $853 million in sales in fiscal 2013, and that it took a $900 million write-down because of unsold Surface RT devices. Not the returns Microsoft was hoping for.

For perspective, research firm IDC estimated that Apple sold 19 million iPads in the first three months of 2013, adding up to an annual run rate of roughly $38 billion.

One InformationWeek reader, commenting on a story about the Surface slump by Michael Endler, put it succinctly (even if he overdid the nautical metaphors):

"Microsoft missed the boat on tablets and now they are trying to catch up. The problem is, they jumped in the water after the boat left the dock and now they are swimming against a riptide."

What can Microsoft do? Cutting prices is a good first step. Many will accuse Microsoft of admitting failure. Too bad. The market has spoken and the Surface devices are overpriced. Microsoft wisely decided to cut the price of the dead-in-the-water Surface RT by 20% to 30%, depending on the model. The 32-GB model is now $349, down from $499. Microsoft may need to keep cutting to spark Surface RT's inertia.

The 64-GB Surface Pro is priced at $899 ($1,000 with keyboard cover!) and needs to be on par with or less than the iPad's $600 to $800 price range. As for those $120 keyboard covers that cost $18 to make: Include them for free.

Microsoft will have to take a hit on the sale price to get people using the Windows 8 Modern UI and buying apps and content from the Windows Store. That's what Amazon had to do with the Kindle Fire. To overdo a baseball metaphor, Microsoft thought it could price high and get into the tablet game on third base. But it has to step up to the plate like everyone else.

In pushing a product very few people want, a big part of Microsoft's solution is to hang tough and make incremental changes. But another part, unfortunately, is to yell louder: "YOU WILL LIKE THE MODERN UI IF WE KEEP ADVERTISING IT! YOU WILL LIKE THE HOMESCREEN TILES! It reminds me of Einstein's definition of insanity.

What about Windows 8.1? It has some solid additions, such as boot-to-desktop mode and a restored Start button. But it's a coat of paint and not real change. It's too late to significantly change Windows 8 anyway. Consumers and business customers didn't bite. Those weak Surface sales numbers speak volumes, as do an unprecedented decline in PC sales this year. As for its overall Windows 8 sales, Microsoft isn't breaking them out in its financial report, but for the fourth quarter, it said that total Windows revenue was down 6% for the quarter and 1% for the entire fiscal year compared with year-earlier periods.

In contrast, the iPad immediately fascinated the buying public when Apple introduced it in the spring of 2010. It didn't take a year to marinate -- it took 5 minutes. Android took longer, but Android operated in the shadows and slowly reached critical mass on smartphones first and is now leading the way on tablets as well. Android currently owns 52.4% of the smartphone market compared to Apple's 39.2%, according to comScore. Meantime, Android accounted for 67% of global tablet shipments in Q2 2013, according to Strategy Analytics. This growth happened organically; the masses (and the hardware makers) came to Android. Unlike Windows 8 and Windows RT, its success wasn't predicated on mass advertising.

Microsoft desperately needed consumers to snatch up Windows Phone smartphones and Surface tablets and bring them to work BYOD-style. That hasn't happened, and it's a serious threat to Windows' enterprise winning streak.

But make no mistake, Microsoft is still comfortably in the black. Last week it reported revenue of $77.85 billion for fiscal 2013, a 6% increase over the previous year. In Microsoft's just-ended fourth quarter, revenue for the company's Business Division (led by Office) grew 14% compared with the year-earlier quarter. It was up 3% for the year. Microsoft stated in its financial report that Office 365 is now on a $1.5 billion annual revenue run rate. The Server & Tools division revenue grew 9% for the quarter and 9% for the full year, driven by double-digit percentage revenue growth in SQL Server and System Center.

With SQL Server, System Center, Windows Azure, Lync and Office 365 product lines all healthy and growing, maybe Microsoft should stop trying to wow consumers and be more like Oracle, with its singular enterprise focus.

If Microsoft has any chance of becoming an Apple-like player in consumer computing, the best it can do now is retrench on its mobile strategy and re-enter its Surface devices running Windows 8.1 at lower prices and longer battery lives. Microsoft blew it by pricing Surface too high. Come back down to earth. Give buyers a deal. It may be the only way to keep Windows 8 vibrant long term.

I don't work for MS. I've just been using Windows 8 and Server 2012 as my main computers for my company for about a year now. If it is so difficult to use, how come my generation (millennials) can pick it up in under half an hour? There are some quirks, but it is not nearly as bad as people claim. I do things fast with 8 than I ever did with 7. And no, secretaries won't always reach to touch the monitor. In Windows 8, touch is a compliment not a replacement. I know, it's hard to understand this until you use a laptop or desktop with touch full-time. But when you do it becomes obvious, some things are easier or faster with touch.

And for a long time Apple's gui was viewed as a useless hopelessly expensive toy. Sound familiar? There was quite an argument originally about people complaining about having to buy new hardware, the mouse.

The mainframe console was a huge improvement over patch cables and voltmeters, and the GUI was a huge improvement over consoles.

New stuff is supposed to be BETTER than the old stuff. It's supposed to make you say COO-well, like Apple's new stuff!

8 is garbage. Unusable. Worthless! You think secretaries will put up with raising their arm up to a screen when a small mouse movement used to do the same thing? You think anyone wants to operate the complexities of a PC with no menus? 8 is a joke that's not funny, and nobody's laughing. It will go down for centuries as Ballmer's Last Mistake.

As for YOU:

"now we have to adapt to this. I don't see the issue aside from laziness."

...identifies you as a sleazy marketing guy in a Redmond cubicle. You think real people say that about difficult-to use, kludgy software, "You're just lazy"?

But that's the kind of thing MS says to its customers. They still think they can bully and bullish it themselves into our IT budget and suck it dry like a parasite.

You think that kind of obvious, duplicitous desperation is going to convince anyone to give you their money?

Forget it, marketing man!

Beat it! Go get a real job before Captain Ballmer drags your whole mickey mouse outfit down to the bottom with the rest of the rusty, broken junk.

David, that is precisely the problem. Microsoft has aimed Win8 directly at them and their usage patterns. How much time are they spending popping back and forth between windows of data trying to correlate them? How often are they attempting to access data on a mapped drive?I think we all can adapt to it. You said you had trouble but I assume you can get around in it ok now. Our complaints are that we shouldn't have to "adapt" to it, the computer is supposed to make our lives easier, not the other way around.

PEOPLE?"People" don't buy phones. People buy access to their wireless providers' services through devices offered by the providers. When is the last time you heard of an Enterprise buying grey market unlocked phones then shop for a service provider?PRICE?The cost of a "$699" iPhone is $70 in parts cost plus the 2 cents an hour they pay Chinese to build it. Assume Samsung (clone of iPhone per court cases) costs are same. Android is FREE and Windows Phone 8 is like $40/device (more stupidly, Windows Phone 6.5 was $25/device). Android also requires cheaper less sophisticated electronics to run. Microsoft should be giving away Windows Phone operating system for free (especially since unlike Android, Win Phone has no HAL.